January 25, 2011

President Obama's recent Executive Order regarding cost-benefit analysis and administrative procedure has drawn criticism both for what it does and for what it does not do. The Order provides little new guidance on how administrative agencies and the Office of Information and Regulatory Affairs (OIRA) should conduct cost-benefit analysis, and perhaps unavoidably it leaves many pertinent questions unanswered. But it does issue one significant directive: it requires agencies to formulate plans to perform "retrospective analysis" of existing significant regulations.

October 12, 2009

This year's annual First Monday lectures -- given each year to give alumni in several cities a chance to discuss with current faculty the issues facing the Supreme Court in its upcoming term -- were presented by Assistant Professor of Law Jonathan Masur. His talk was entitled "The Assertive Supreme Court: Patent Law and the Future of Economic Regulation." The version presented at the lecture in Chicago last week is now online.

July 23, 2009

Cost-Benefit Analysis (CBA) is the dominant mechanism for weighing the utility of proposed regulation, but it is not without its critics. One major alternative is so-called "feasibility analysis". Eric Posner presented today his current paper (co-authored with fellow Chicago professor Jonathan Masur) which provides the first sustained, comprehensive attack on feasibility analysis. They conclude that feasibility analysis is unacceptably vague and has no substantial normative foundation justifying its use as an alternative to CBA.

Feasibility analysis proceeds in three steps. First, the regulatory agency identifies a risk. Second, it identifies the relevant industry that it will seek to reduce the risk in. And third, it tries to reduce the risk to the greatest degree possible, consistent with two restraints: technological, and economic. Because one of the main justifications for using feasibility analysis is that it can better account for concentrated harms, the sort of economic result that would render a proposed regulation "unfeasible" is often one that causes entire plants to close (as opposed to industry-wide layoffs scattered across every factor). Alternatively, OSHA has adopted a standard which says a regulation cannot cause more than either a 1% drop in revenue or 10% drop in profits.

January 22, 2009

A die-hard retributivist and an efficiency-obsessed utilitarian walk into a bar... and start discussing punishment theory. Beyond their propensity for the abstruse, what might these two philosophical opponents share in common? If anything, it will be the belief that the intentional harm (punishment) a state inflicts upon its own citizens be calibrated to the perceived severity of the crimes those citizens commit. For the former, proportionality is fundamental; for the latter, the loss of marginal deterrence that follows imposition of disproportionate punishments would be unpalatable. How, then, does punishment affect the subjective well-being of those who are punished? That is the question Professors Jonathan Masur, John Bronsteen, and Christopher Buccafusco set out to answer in their new paper, Happiness and Punishment (forthcoming U Chi L Rev), which they presented at the Crime and Punishment Workshop last week.

Preventing global warming requires lowering carbon production, and China produces a high level of carbon emissions. China gains a significant advantage to its economic growth from its continued use of fossil fuels, but the harms from global warming will fall disproportionately on other countries. Thus, some writers advocate giving side payments to China as part of an international agreement to reduce global warming. Their analysis treats China as a "black box"; the input is money, the output is reduced carbon emissions. But when we open the box, the situation is not so simple. The box really has two Chinas inside.

In the most recent edition of Chicago's Best Ideas on January 14, Professors Daniel Abebe and Jonathan Masur presented "The Two Chinas and the Problem of Global Warming," based on their paper "Climate Change and Internal Heterogeneity." The first China is Eastern China. Eastern China is prosperous, having experienced a blistering growth rate around 10 percent annually over the past couple decades. Most of China's major cities dot the Eastern coast, and the cities are hubs for finance and manufacturing. The second China is Western China. Western China resembles a developing country and is still mostly agrarian. Per capita GDP is half what it is in the East (9,967 yuan versus 19,813 yuan). The interplay between the two gives the Chinese Communist Party (CCP) incentives to not accept a climate-change treaty.

October 09, 2008

We have begun a new project of inviting students to act as blog correspondents for some of the many workshops, lectures, and conferences that take place each week at the Law School. We believe that the blog is an excellent medium for recording and communicating a broad sample of the intellectual life of the law school, and we're excited about the possibilities for outside engagement with internal activities that this project will trigger. This project begins with a blog post on a recent Law & Philosophy Workshop given by Professor Brian Leiter; over the next few weeks, expect to see a growing number of posts from these Student Correspondents on a variety of topics and events.

October 06, 2008

Just over a week ago, Nate Silver, the founder of the excellent political blog FiveThirtyEight.com, wrote about potential manipulation of Intrade’s information market on the 2008 presidential race. It’s difficult to gauge whether this manipulation is in fact occurring, in part because it’s hard to imagine that very many traders would be willing to invest thousands of dollars in moving a relatively meaningless information market more than a month before the election. Late last week, however, Intrade’s political market almost certainly fell subject to strategic manipulation, this time with a much more prosaic goal: to exploit overlapping markets in order to turn an easy profit.

September 22, 2008

At the moment of this writing, traders on Intrade—probably the most prominent and active information market in the world—have Barack Obama at about 53.5% to win the 2008 election. Meanwhile, over at the Iowa Electronic Markets—maybe the second-most prominent information market in the United States—traders have Senator Obama at approximately 63% to win the election. This type of broad schism is not supposed to occur in information markets (or any other type of market, for that matter). It raises a number of interesting questions about why the divergence has developed, why it has been allowed to persist, and which of the two figures is to be believed.

April 16, 2008

Assistant Professor of Law Jonathan Masur (along with coauthors Christopher Buccafusco and John Bronsteen) recently posted a paper called "Hedonic Adaptation and the Settlement of Civil Lawsuits" to SSRN (the paper will also be published in an upcoming volume of the Columbia Law Review). The abstract is below and the full paper can be downloaded here.

This paper examines the burgeoning
psychological literature on happiness and hedonic adaptation (a
person's capacity to preserve or recapture her level of happiness by
adjusting to changed circumstances), bringing this literature to bear
on a previously overlooked aspect of the civil litigation process: the
probability of pre-trial settlement. The glacial pace of civil
litigation is commonly thought of as a regrettable source of costs to
the relevant parties. Even relatively straightforward personal injury
lawsuits can last for as long as two years, delaying the arrival of
necessary redress to the tort victim and forcing the litigants to
expend ever greater quantities of resources. Yet these procedural
delays are likely to have salutary effects on the litigation system as
well. When an individual first suffers a serious injury, she will
likely predict that the injury will greatly diminish her future
happiness. However, during the time that it takes her case to reach
trial the aggrieved plaintiff is likely to adapt hedonically to her
injury - even if that injury is permanent - and within two years will
report levels of happiness very close to her pre-injury state.
Consequently, the amount of money that the plaintiff believes will
fairly compensate her for her injury - will make her whole, in the
typical parlance of tort damages - will decrease appreciably. The sum
that the plaintiff is willing to accept in settlement will decline
accordingly, and the chances of settlement increase - perhaps
dramatically. The high costs of prolonged civil litigation are thus
likely to be offset substantially by the resources saved as adaptive
litigants succeed in settling before trial.